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By Graham Hayday, 14 August 2002 12:23

NEWS Thus has cut its losses by more than one third in its latest financial quarter, partly due to strong demand for its ADSL services, but has warned that the continuing tough market conditions may hurt its growth prospects over the next six months. The telecoms group, which owns ISP Demon, recorded a £13.9m loss for the quarter ending 30 June. Turnover grew by 11 per cent year on year to £71m. It maintained its 2002 revenue growth target of between 20 and 25 per cent, but said that the figure will be in the bottom half of this range if "pricing pressure" continues into the second half of the year. Thus said it consumed £5.9m of cash during the quarter, compared with £45m in the previous quarter. It has £8.7m in cash, as well as £80m undrawn from its banking facility - enough to see it through to being cashflow positive, according to the company's financial statement. Internet turnover stood at £22.5m, up 22 per cent year-on-year and up four per cent from Q4. Net-related business services showed strong growth, up 35 per cent year-on-year to £10.8m. Thus claims this was driven by high levels of ADSL demand. It had 8,142 customers at the end of the first quarter compared with 1,806 at the end of the same quarter last year. Despite an average 21 per cent reduction in ADSL prices from April 2002, following BT's reduction in wholesale rates, business service sales remained stable. William Allan, chief executive of Thus, said: "Our results for this quarter demonstrate good year-on-year sales growth in our target markets of data, telecommunications and internet business services." He added: "The well-publicised corporate failures and financial restructurings within our sector continue to create uncertainty in our target markets. It is clear that some of our competitors are reacting to these events with unsustainable pricing. The underlying non-financial drivers in our business remain strong but, as we have stated previously, we are not prepared to grow our revenues at the expense of the bottom line and cash flow."